Getting car insurance is always necessary. This is your main protection when something goes wrong. However, there are things that insurers don’t always tell you, like the fact their policies vary around the country.
A few key details can help you ensure you’re getting the best deal on your cover. Here’s a guide to what nobody tells you about car insurance.
1. How Costs Are Determined
While every insurance company in the United States has its own way of determining prices, each uses some common factors. These are often regional – the way Pennsylvania car insurance and Miami car insurance are calculated is broadly similar, but you won’t get the same premiums. Why?
The critical factor is risk. All insurance calculations are based on risk assessment. The higher the risk, the higher the price.
A significant factor is where the client lives. Many car insurance companies consider drivers in urban areas with a considerable crime rate as higher risk. Conversely, drivers in rural areas with fewer car thefts tend to enjoy lower premiums.
Other well-known factors include:
- The car’s make and model
- The way the client uses their vehicle
- The client’s driving record
Other factors include the client’s age, marital status, and gender. Age makes sense – after all, different studies have shown that young drivers are far more likely to have accidents. The same data shows that male drivers have more accidents, so they may incur higher premiums depending on the region.
There are all sorts of fascinating metrics underwriters use to calculate premiums. For example, married clients tend to file accident claims at a pretty low rate, so marriage finally pays off!
2. There Are Plenty Of Ways To Pay Less
There are several ways to lower your insurance bill safely and legally, which is something that the vast majority of car insurance companies won’t tell you. After all, they’ve got products to sell. For example, you could reduce your coverage in some cases, like dropping comprehensive coverage on a vehicle that already has a lot of time on the street.
Another great way to pay less is by raising the deductibles. Of course, this is only viable if you can afford the potentially higher out-of-pocket prices. Doing your own risk assessment can save you money.
According to the Insurance Information Institute, you can reduce the collision and comprehensive coverage price by as much as 30% by increasing the deductiblesfrom $200 to $500. The institute also points out that you can save 40% or even more by going to a $1,000 deductible.
3. Insurance Companies Won’t Cover Using Your Car For Business
This is an extremely important fact that no one tells you about car insurance. It’s more important today than ever – we’re living in a time when millions are looking to make extra money with their cars by working on taxi and delivery apps.
Despite this, most policies exclude driving your car for business purposes. Many insurance companies will even cancel your policy if they know you’re using it for driving jobs.
It’s highly recommended to make sure you’re covered appropriately before using your car for a side hustle. If there’s an accident, you’ll be on the hook for everything, so talk to the insurance company about getting the “endorsement” to your policy when you use your vehicle for work.
Understanding how insurers calculate your premiums helps you find the best policy. Knowing when you can and can’t cut corners on your coverage is also essential – remember that if you get in an accident, your friendly insurer will suddenly zip their pockets tight. Keep yourself informed and protected with these tips.